We anticipated in our recent news item changes to the rules on planning obligations to be introduced on 6 April, but an earlier policy change announced in a written ministerial statement on 1 December 2014 and little remarked at the time, is now making headlines. At that time new paragraphs were introduced into the Planning Practice Guidance dealing with Vacant Building Credit (VBC).

VBC guidance provides that where a vacant building is brought back into use, or is demolished and replaced as part of the proposed development, a Local Planning Authority “should” deduct from any affordable housing contribution required from the development an amount equivalent to the existing gross floor space of those vacant buildings.

This rule change was announced by the Government as being part of a package of measures to help smaller developers build more homes across the UK, but is alarming some LPAs owing to high profile examples such as where developers of 36 luxury flats in Grosvenor Square, backed by the Abu Dhabi Investment Council, used VBC to reduce their contribution to affordable housing in Westminster from £17.6m to £8.6m. Controversy is inevitable when a policy designed to encourage brownfield development and get vacant buildings back into use in areas where it would otherwise be unlikely, results in an unexpected windfall for large developers in areas where high property values mean no incentives to develop were needed.

Lack of detail in the Guidance may result in disagreement between LPAs and developers over:

  • how long a building must be vacant for VBC to apply
  • how is the 'discount' calculated in real terms where the contribution is based upon unit numbers and not gross floor space
  • as VBC does not apply where the building has been abandoned, what constitutes “abandonment” for this purpose?

LPAs may well take different approaches to these issues leading to uncertainty as to how VBC will apply at local level. The use of “should” rather than “must” in the guidance gives local authorities a wide discretion as to whether they apply the credit. Whilst we are not aware of any local authorities refusing to give VBC, a number may be taking advice on it and legal challenges must be contemplated.

Further official guidance is expected shortly and will hopefully clarify some of the uncertainties.